Insurance for used cars is one of the tastiest morsels of the insurance market. There is a fierce battle for it between insurance companies. In relation to used cars, insurers behave contradictory: on the one hand, they willingly accept them for insurance, and on the other hand, they do not get tired of declaring that insurance for a used car is inexpedient and not profitable. Let’s consider all the pros and cons of used car insurance.
Are there any disadvantages when it comes to used car insurance? Let’s consider the reasons why the sale of used car insurance may be unprofitable for the insurer. First, for obvious reasons, insurance premiums for a used car are much less than for a new expensive car without a run. Accordingly, the primary profit of insurance companies is lower, and this is a perfectly understandable economic argument. Nobody wants to insure themselves at a loss. That’s why many insurers don’t accept cars of old years of production for insurance. Almost in any company, there is a restriction on the age of the insured car, and these requirements are not always dictated by purely technical arguments.
The second drawback is technical. Often, an old car has a whole bunch of hidden faults and defects. Taking such a used car for insurance, it is often impossible to diagnose all these hidden breakdowns even with a detailed examination. Even if some part that has exhausted its resource is completely serviceable, the safety margin of such a mechanism is extremely low. Poor technical condition of the vehicle leads to an increased accident rate and, as a result, to additional expenses of the insurer in more frequent insurance cases. The risks of accident damage to a used car is also higher because old parts do not withstand the extreme loads in a collision that new ones could.
Why is there so much competition among insurers for the opportunity to insure used cars? The attractiveness of the used car market for insurance companies is due to the following reasons:
Used cars are less likely to be stolen, and this is their big advantage over the latest models for the insurer. If you look at the detailed statistics of insurance transactions in recent years, then the segment of used cars of different years of production, both domestic and foreign, is not much inferior to the segment of new cars.